J.P. Morgan has no need of your intelligence

Roland Smith (a pseudonym) used to work for J.P. Morgan. He was an analyst on an industry team until, like plenty of other analysts nowadays, he quit to found a start-up. While other ex-analysts busy themselves with apps intended to gauge how much you chew food or the location of the nearest pet groomer,Smith’s start-up already has €1m of seed funding, 30 staff, and offices in the UK and Europe.

Most analysts who leave banking are circumspect about their reasons for going. Smith isn’t. In so many words he portrays an industry obsessed with hiring the best and brightest, only to set them to work on repetitive tasks requiring blind adherence to authority, which should really have been automated already.

“The role of an analyst is entirely about execution,” says Smith. “It’s about doing what you’re told and putting in the hours. At no point was I asked to think: I was just asked to execute. If you push back, it delays the execution, so you just do what you’re told and spend your day executing and going through the process.”

In banking terms, executing means “doing.” And doing, according to Smith, means spending hours putting repetitive Powerpoint presentations together for clients and potential clients. “As an analyst, you spend 75% of your time on PowerPoint, making presentations,” says Smith. “Excel modelling is the most valuable and interesting part of the job, but you don’t do very much of that.” Smith has a first class degree in accounting and finance from the London School of Economics (LSE). Modest and quietly spoken, he’s not in the least bit arrogant, he’s just frustrated: “I’m not saying that I’m well-qualified – but I did wonder why banks are recruiting top people for these roles,” he says.

Under so-to-be new CFO Marty Chavez, Goldman Sachs is expected to increase the automation of analyst and associate jobs in its investment banking division (IBD). Smith left J.P. Morgan in early 2016, but he paints a picture of a division operating in the dark ages. “You’re making presentations for the same market and each time you build a new presentation, you’re spending a lot of time redoing similar slides,” he says. “J.P. Morgan had an email list which allowed us to share the contents of presentations.”

Smith’s biggest bugbear was the amassing of “comps” or comparables – the data on rival companies that’s needed to price target companies or the business being disposed of. “It’s the role of the analyst to update these comparables,” he says. “Each analyst was assigned 20-25 companies to update each trimester and it basically involved going through all the accounts and making sure everything was accurate. You could easily spend 100 hours on it. It’s the kind of thing you stay in late for, but it could very easily be automated. All you’re really doing is pulling information from FactSet and Bloomberg.”

Smith left J.P. Morgan after less than a year. “Banking is an industry that was great 15-20 years ago when you were in the right place at the right time. Today it’s just very frustrating. The learning curve isn’t where it used to be and there’s much less client exposure,” he says. It didn’t help that he had a point of comparison after running his own company whilst studying at the LSE: “In banking I learned so much less. My job was so restricted.”

Smith is just one ex-analyst with an entrepreneurial bent and his perspective is necessarily subjective. However, it’s a perspective that J.P. Morgan and other banks that are struggling to retain juniors would do well to take account of. It’s not the working hours that are the issue for young bankers like Smith (“You know you’re going to work 100 hours a week in advance”), it’s the work itself: “You just do what you’re told, whereas places like Google tell you you’re going to have an impact.”

Smith says banks which don’t address analysts’ grievances will take a hit financially: “People are leaving too soon. Analysts used to leave for private equity after two years, but funds today start chasing you after six months. Banks are spending a fortune training these people and if they leave after 12 to 18 months, they’re going to lose money.”